The stock market was reluctant to keep rallying as it processed the latest minutes of the Federal Reserve Open Market Committee, released yesterday. The minutes were somewhat surprising, as the committee members noted their expectation for inflation to “move back to the committee’s 2 percent target over the medium term as resource slack diminished in an environment of well-anchored inflation expectations.” Many Federal Reserve committee members last month urged the body to remain vigilant for signs of declining inflation, however, and the minutes also revealed broad-based debate on whether to retain the committee’s pledge to keep interest rates near zero for a “considerable time.” Read more about News of the Week: Fed and Housing 11-20-14
The stock market hit a new record this week, although the daily gains were small. Moreover, large-cap shares were reluctant to make sharp moves, after four straight daily records, and the S&P 500 declined slightly yesterday.
This pause is nothing to be scared of, as the S&P 500 is taking a breather after managing to quickly recover from October lows, with a total advance of more than 9 percent since then. What supported the market were higher-than-expected earnings results in the third quarter season as well as good economic data indicating that the U.S. economy can weather a global slowdown despite the end of the massive Federal Reserve Quantitative Easing program at the end of last month. Read more about Rally Takes Well-Deserved Break 11-13-14
U.S. stocks were up again today after voters on Tuesday acted to give control of the Senate to Republicans come January. The modest rally also followed on the heels of strong earnings report and news on more QE, this time from Japan.
Last Friday, the Bank of Japan announced an unprecedented plan to purchase roughly 80 trillion yen worth of securities annually, in its continuing fight with deflation. The Bank of Japan's Act states that monetary policy should be “aimed at achieving price stability, thereby contributing to the sound development of the national economy,” and in January 2013 that “price stability target” was set at 2 percent annual change in CPI. Read more about Rebound Continues 11-06-14
After taking a short breather yesterday upon the release of the Federal Open Market Committee (FOMC) statement, U.S. shares continued to march higher today, on good earnings and stronger economic news. Third-quarter U.S. economic expansion exceeded expectations, completing its best six-month showing in more than 10 years: third-quarter gross domestic product (GDP) increased at a 3.5 percent annualized growth rate, on the heels of an annualized 4.6 percent second quarter growth rate. This resulted from increased government spending and a shrinking trade deficit, which compensated for slowing household expenditures. Read more about Good News from Bristol-Myers Squibb and the U.S. Economy 10-30-14
This week can’t help but please investors as their worst fears were alleviated on the most recent economic data. Tuesday was the best market day in a year, with the S&P 500 adding 2 percent. While yesterday the market gave up some of Tuesday’s gains, today’s action was again very positive, on strong earnings reports, good news from the labor front (fewer Americans filed new unemployment claims than at any point since 2000), and on indications of stronger growth in Europe.
We got off to a weak start on Monday when International Business Machines (IBM) was the market’s, laggard, after the technology giant reported a disappointing quarter and pulled its long-standing earnings target of making $20 in adjusted EPS in 2015. An unprofitable chip unit is being sold, or, rather, disposed of, as IBM has to pay $1.5 billion to Globalfoundries, Inc. to take it off its hands. Read more about A Very Strong Week 10-23-14